On October 1st when people actually use the health exchange they have a lot of questions which need to be clarified.
One of the questions is to do with subsidy payments:
When people buy health insurance on the exchange they will have to pay the full monthly premium for the insurance. The federal government will pay subsidies through tax credits which are collected annually. Now for a low income person who lives from pay check to pay check to afford this would be difficult to afford.
But they don't have to do that as when a consumer applies for a health insurance plan in the market place they will be asked to provide income details - to decide whether they are eligible for subsidy on tax credits. This is made available to people with income 400% of the federal poverty level. Consumers who qualify can opt to receive tax credits in advance and the exchange will forward the money directly to the insurer every month. Consumers can also choose to receive their tax credit when they file their tax returns the following year.
The best way to do this will be to calculate one's income as accurately as possible and contact the exchange if the income varies says Cheryl Fish-Parcham, deputy director for health policy at Families USA, a consumer advocacy group. When you calculate your taxes for 2014 and you have received more than you should you may have to repay the excess amount or collect some money if you have collected less.
If in doubt, consider taking only some of the credit up front. "If people are worried about reconciliation and the possibility their income could increase, they can take part of [the credit] in advance and get the rest at tax time," advises Fish-Parcham.
Are people terminated from the policy when they don't make premium payments punctually? Can they re-instate their policies?
When consumers receive an insurance premium subsidy from tax credits, they receive a 90 day grace period to make the premium payments says Edwin Park, vice president for health policy at the Center on Budget and Policy Priorities.
After this 90 day grace period they have to wait for the next annual enrollment period and re-enroll for coverage. They may have to pay a penalty when they are uninsured for more than three months.
Hannah Punitha (IRDA Licence Number: 2710062)
Michelle Andrews August 2013